Using Alack’s “Magic Word” in Exculpatory Contract Provisions

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There is almost never such a thing as a magic word anymore. In medieval England, people would recite things three times to get magical protection (“third time’s the charm”). Similarly, in the earliest days of the law, parties would write contracts “under seal” that protected them, regardless of whether the contract was otherwise valid. That is what a magic word does; it protects you just by being there. Today, the law hates magic words; courts constantly dig into the hidden meaning behind material terms and the intent and understanding of the parties who use them. Because there is almost never such a thing as a magic word these days, when one does occur business owners would do well to take note.

Nearly twenty years ago, the Missouri Supreme Court held that in a consumer agreement (an agreement between an individual consumer and a business), in order for the business to waive claims regarding its future negligence, “[t]here must be no doubt that a reasonable person agreeing to [such] an exculpatory clause actually understands what future claims he or she is waiving.” Alack v. Vic Tanny Int’l of Missouri, Inc.,923 S.W.2d 330, 337-38 (Mo. banc 1996). Alack requires that a contract provision waiving claims regarding a party’s future negligence must meet certain requirements to ensure that the party who is giving up the right to bring claims for negligence knows what s/he is agreeing to. The Supreme Court specifically noted that “[w]hile the magic word ‘negligence’ is not required, the language must ‘put plaintiff on clear notice of such intent.’” Id., at 338. In so noting, the Supreme Court gave businesses the magic word of “negligence.”

Subsequent decisions by Missouri courts have fleshed out when other language—language besides the word “negligence”—might put parties on notice that they are waiving the right to bring claims of future negligence. SeePurcell Tire & Rubber Co., Inc. v. Executive Beechcraft, Inc., 59 S.W.3d 505 (Mo. banc 2001); Util. Serv. and Maint., Inc. v. Noranda Aluminum, Inc., 163 S.W.3d 910 (Mo. banc 2005); Sports Capital Holdings (St. Louis), LLC v. Schindler Elevator Corp., et al., 2014 WL 1400159 (E.D. Mo. 2014); Village of Big Lake v. BNSF R. Co., Inc., 433 S.W.3d 460 (Mo. App. W.D. 2014). These cases look into the sophistication of the parties and whether language equivalent to “negligence” is used. The general trend has been: the more sophisticated the party to the contract, the less Missouri courts are worried that the party will unwittingly forfeit its right to bring claims regarding future negligence. However, regardless of this trend, no Missouri court has distubed the conclusive significance of the word “negligence.” Regardless of sophistication, using the word “negligence” in waiver provisions does the trick.

Given that the Supreme Court in Alack gave parties such a clear directive, it is surprising that disputes over the sufficiency of other language still arise. Much of the dispute in these cases, the most recent of which occurred just last year, could have been entirely avoided if the parties had simply used the magic word “negligence” in their provisions releasing claims for future negligence. While language such as “fault,” “liability,” or “any and all claims” may be sufficient, not using “negligence” opens the door for a fight, and the extensive litigation and legal fees that often accompany such fights.

In Alack, the Supreme Court gave business owners a magic word. This magic word, just by being there, puts a party on notice that they are releasing claims for future negligence. Not only will this magic word likely be conclusive in a dispute, it may even stop the dispute from starting. Accordingly, business owners who wish to avoid a messy fight over whether the exculpatory clauses in their contacts sufficiently notify the other party that they are releasing claims of future negligence should take care to use the actual word “negligence” in such clauses. Doing so could save savvy parties from unnecessary litigation and unnecessary legal fees, a result which, in today’s world, is nothing short of magical.